Congress granted Medicare, the country's largest buyer of prescription drugs, the authority to negotiate how much it pays for certain high-priced therapies and to receive rebates on treatments whose prices rise faster than the rate of inflation under the Inflation Reduction Act.
According to people familiar with the efforts, drugmakers are attempting to mitigate the law's impact as regulators begin to work on the details of implementing the provisions.
However, the lobbying comes at a time when one of the industry's largest trade groups, the Biotechnology Innovation Organization, is looking for a new leader after its chief executive clashed with board members and resigned.
"We're at a critical juncture in which Big Pharma must take a step back and ask, 'How am I going to continue to develop and grow while dealing with all of these pressures on my core business costs?'" Maria Whitman, principal at pharmaceutical consulting firm ZS Associates, agreed.
BIO and the Pharmaceutical Research and Manufacturers of America, the industry's other major trade group, said the law jeopardized investment in drug development while failing to do enough to reduce drug costs for patients.
Both organizations also stated that they are working to limit the law's impact on drug research.
For years, the pharmaceutical industry successfully resisted legislative attacks on drug pricing while securing major victories such as the creation of Medicare's Part D drug benefit, which the Congressional Budget Office estimates will cost $111 billion this year for prescription pills.
Companies could previously count on allies like the late Republican Sen. Orrin Hatch and some Democrats to support their legislative priorities.
The pharmaceutical industry lobbied against the Inflation Reduction Act, claiming it would reduce investment in drug development. The new law allows Medicare to negotiate the prices of prescription drugs that are the most expensive to the program and have been on the market for nine years if they are pills or 13 years if they are injections.
Starting next year, the law also requires companies to pay Medicare rebates if they raise the price of a drug by more than the rate of inflation during the period.
In addition to healthcare provisions, the law includes a package of tax and climate provisions.
"In all the years I've been following the drug industry, which is about 50 years, this is the first time they've ever suffered a legislative defeat in Congress," said Ira Loss, a senior health analyst at the research firm Washington Analysis.
The passage of the law, according to David Mitchell, president of the advocacy and lobbying group Patients For Affordable Drugs, demonstrated that "pharma can be beaten."
A provision sought by drugmakers in the bill would reduce the amount seniors covered by Medicare are required to pay out of pocket for prescriptions, potentially encouraging greater use of high-priced medications.
Democrats passed the law without the support of a Republican, thanks to a process known as budget reconciliation, which allowed Democrats to move the bill through a 50-50 Senate with a simple majority, rather than the 60 votes normally required.
In 2021, Democratic Reps. Scott Peters of California and Kurt Schrader of Oregon joined Republicans in blocking the passage of a bill aimed at lowering prescription-drug prices by tying them to what other countries paid. They argued that the bill would stymie drug research and development.
They supported the Inflation Reduction Act this year.
Mr. Peters' spokesman said he supported previous attempts to lower drug prices and last year proposed an alternative to the proposed legislation that would not stifle medical and pharmaceutical research.
According to OpenSecrets, which tracks campaign finance filings, Mr. Peters has reported more than $1.1 million in campaign contributions from the drug and healthcare industries since joining Congress in 2012. According to the center, he is the top congressional Democrat in terms of drug donations this election cycle, receiving $125,850.
Mr. Schrader received $107,250, the second-highest amount among Democrats in the House. He stated that he opposed the legislation last year because it contained provisions that would discourage drug development and would have died in the Senate even if it had passed the House. He stated that he collaborated with other lawmakers on the Inflation Reduction Act.
"We wouldn't have the IRA if it hadn't been for the work that myself and a few other dedicated people did," he said in an interview.
Rep. Kathleen Rice of New York, a third Democrat who voted against last year's legislation but supported the Inflation Reduction Act, received $8,000 in industry donations. A request for comment was not returned by a spokeswoman.
According to Jefferies LLC analysts, the Inflation Reduction Act could reduce pharmaceutical company sales by $40 billion through 2032. Companies are attempting to determine how the law will affect them and what steps they can take to mitigate its impact.
According to Alice Valder Curran, an attorney at Hogan Lovells who advises drugmakers, the law will alter the economics and commercialization of any new, innovative product.
Companies are now working to mitigate the legislation's impact by developing rules that detail its implementation and lobbying for additional legislation that could counter some measures, according to people familiar with the efforts.
Some of the suggestions include extending the time frame after which certain medications become eligible for Medicare price negotiations, going beyond the nine-year trigger specified in the Inflation Reduction Act.
Some of the people said the industry is also looking for measures to encourage companies to continue testing a drug after it has received regulatory approval, to exempt drugs that treat more than one rare disease, and to expand or make permanent a temporary exemption for some drugs if they are a company's main source of sales.
The actions come as BIO seeks new leadership after its chief executive resigned amid disagreements with board members, according to The Wall Street Journal. According to the Journal, the former CEO believed that the organization's advocacy should remain focused on biotech, whereas some board members wanted BIO to engage in more general social issues that were not directly related to healthcare policy.
The change in leadership at BIO will not affect the organization's advocacy on behalf of the industry, including its support for the Inflation Reduction Act, according to a group spokeswoman.